Transformation of Pratt & Whitney North Heaven (Abridged)
Company Background
Business Unit Manager of Aluminum Coating division of Pratt & Whitney was Tom Hutton. He was one of the top performing employees for the company and came under top ten categories of highest potential employee as well. The general manager of the plant was Ed Northern, because of the remarkable performance of the Tom Hutton, Ed Northern promoted him to lead the plant efficiently for the best sake of the company.
The company was a subsidiary of an aircraft engine of the United Technologies Corporation (UTC). At the beginning, Pratt sold aircraft gas and spare parts, also overhauled and maintained the repairing of engines andonly used the necessary items for the effective maintenance of plant.In the year 1993, both Pratt& Whitney involved in the installation of commercial jet engines and had installed roughly 15,000 engines. These engines proved to be beneficial for the company and had added 480 customers, including domestic as well as global level.
Due to the economic crisis and recession in the 1990’s, it caused decrease in the order for the company and it suffered from it very badly. Crisis in the airline industry caused a negative impact to the aircraft engine manufacturing business. Aircraft engine manufacturers benefited a lot from this situation and charged costly prices from the companies, financing terms also changed a lot.These factors caused a significant decrease in the profit of Pratt & Whitney.
Sources of Revenue
Pratt & Whitney had three major sources of revenue which are as follows:
- Sale of Engine
- Spare Parts
- Engine Overhauling
Sale of Engine
Pratt & Whitney major source was the revenue generated from the sale of the engines. Various engines have sold during the 1980’s and as a result of it, it resulted more than three times revenue.
Spare Parts
Another source of revenue was the spare parts, the company also generated sufficient amount of revenue from it. Spare parts sales had decreased a lot due to the economic crisis in the 1990’s, roughly sales of spare parts dropped 50% as compared to the past.
Engine Overhauling
The last source was the repairing and maintenance of engine which also known as “engine-overhauling”. It refers to the entire new engine to efficiently participate in the manufacturing process. This source benefited Pratt & Whitney tremendously and also the products cost effective while the manufacturing process.
Problem Definition
The company’s business unit manager, Tom Hutton has authorized hourly workers in order to buy grit blast equipment for the two cells. The decision to purchase the equipment causes various critical issues to be considered by the company’s management.Purchase decision needs efficient strategy to implementto run the plant.
Alternatives
Pratt & Whitney faced various problem and issues when decided to purchase the equipment. Ed Northern brought significant improvement for the company and changed the company’s vision. Some of the alternatives that may be beneficial for the company are:
- Purchase of machine
- Total Quality Management
- Worker’s Empowerment
Purchase of Machine
Purchase an equipment is always beneficial for the efficient working of the plant. It is a good option for Pratt & Whitney to purchase grit blast equipment for the plant because it reduces per hour wages cost and maximize the profit.
Total Quality Management (TQM)
It is very important for Pratt & Whitney to implement TQM process before the process of purchasing the equipment as Ed Northern also suggested.The process will be beneficial for the company and improves the quality of products................
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